Romania limits pension withdrawals for OECD compliance; contrasts its taxation with Bulgaria’s non-taxation.
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The Romanian government limited the ability to withdraw all pension fund money at retirement due to OECD requirements and examples from countries like Bulgaria, Croatia, and Ireland. A key difference noted is that pensions are taxed upon withdrawal in Romania, unlike in some of those mentioned (except for a threshold in Ireland). The Romanian pension system has three pillars: Pillar I is the public pay-as-you-go system; Pillar II is mandatory private pension funds; and Pillar III is voluntary private pensions. Currently, withdrawals from Pillars II and III are either taken as a lump sum or spread over five years. To align with OECD standards, a new law allows beneficiaries to withdraw a maximum of 30% of accumulated funds in Pillars II and III, with the remainder paid out monthly for eight years or as a lifetime annuity, unless the total private pension amount is under 15,300 lei, allowing full withdrawal or a 12-month installment plan. Oncological patients have an exception to withdraw all funds at once. Furthermore, from August 1, 2025, a 10% health contribution (CASS) will be applied to private pension income exceeding 3,000 lei in Romania. The government cited international practices, such as those in Italy, Croatia, South Africa, Ireland, and Poland, when developing these regulations. In contrast, the Bulgarian system allows for different withdrawal options based on accumulated savings relative to the minimum pension, but crucially, pensions (both public and private) are not taxed in Bulgaria.
